Dismissed on economic grounds with 20 days' pay: how to challenge it

The case, in five lines

What is brought

Claim challenging the termination of the contract on objective grounds under article 52.c) ET, brought through the dismissal procedure (arts. 120 to 123 LRJS), seeking a declaration of unfairness for lack of cause or formal defect and, where there are grounds, a declaration that it is void.

Before which court

The social section of the Tribunal de Instancia (the first-instance court) where you worked or where the company is domiciled, at your choice, after conciliation before the regional mediation, arbitration and conciliation service (the SMAC in Madrid). The requirement in article 5 of LO 1/2025 does not apply: it belongs to civil and commercial cases.

Deadline

Twenty working days, a lapse period (art. 59.3 ET and art. 121.1 LRJS), from the day after the termination date, that is, when the notice period expires, although you may sue as soon as you receive the letter. Saturdays, Sundays and public holidays do not count. The conciliation request suspends the count, which resumes the day after the meeting, or after fifteen working days if it is not held (art. 65.1 LRJS).

Who can bring it

The dismissed worker sues the company named as employer. If there are signs of a group with a common treasury or intermingled workforces, the other companies are sued too, and if the company has closed or is insolvent, FOGASA (the Wage Guarantee Fund) is summoned.

Financial risk

If the dismissal is found fair, you keep the 20 days per year and your entitlement to unemployment benefit, and nothing more. At first instance the worker pays no costs, save for a fine for bad faith or recklessness. If you win unfairness, the company chooses between reinstating you or paying 33 days per year up to 24 months' pay, minus what you received; with voidness, reinstatement is compulsory.

The company must prove the crisis it wrote in the letter

Article 52.c) ET allows your contract to be ended for one of the causes in article 51.1 without reaching the collective dismissal thresholds. An economic cause exists when a negative economic situation emerges from the company's results, in cases such as current or forecast losses or a persistent fall in its ordinary income or sales. Earning less than the previous year is, on its own, hardly a negative situation.

For falling income the law sets an automatic rule: the fall is persistent if, for three consecutive quarters, ordinary income or sales in each are lower than in the same quarter of the previous year. The comparison is quarter against quarter, not year against year, and a single quarter that improves breaks the chain. And it is ordinary income: the sale of premises or a one-off grant stays out of the calculation.

Article 122.1 LRJS declares the termination fair only if the employer, having complied with the formalities, proves the cause stated in the written notice. The burden is on the employer, and it is tied to what it wrote. A letter that speaks of “the difficult climate” without figures does not allow you to defend yourself, and the Tribunal Supremo (the Spanish Supreme Court) requires it to give you sufficient knowledge of the cause. The judge does not review whether dismissing was the best management choice, but does check that the cause is real, current and connected to the removal of your post.

Paying when the letter is handed over: the requirement that sinks most dismissals

Article 53.1 ET requires three things: a letter stating the cause; making available to you, at the same time as it is handed over, compensation of twenty days per year, prorated by months and capped at twelve months' pay; and fifteen days' notice, copied to the workers' legal representatives. Under article 122.3 LRJS, if one of those requirements fails the dismissal is unfair even if the crisis is real, with the exception for notice explained below.

At the same time means in the same act. A company complies if it hands you a cheque with the letter, or orders the transfer that same day and can prove it. It does not comply if it announces that the compensation will come with the final settlement at the end of the month, or pays days later without having invoked anything in the letter. Then there is no need to argue about the accounts: the dismissal is unfair on form, and that day's bank statement proves it.

The only lawful way out is in the second paragraph of article 53.1.b): if the cause is economic and, because of it, the company cannot pay at that moment, it may refrain from paying by stating so in the letter, and you may demand payment once the termination takes effect. But having losses is not the same as having no cash. The Tribunal Supremo requires the company to prove the lack of liquidity, and one that pays wages and suppliers as normal that month will struggle. Its bank statements, which we request in the claim, decide this point.

A mistake in the figure: when the law forgives it and when it does not

The law saves two failings: missing notice and an excusable error in calculating the compensation do not make the dismissal unfair (last paragraph of article 53.4 ET and article 122.3 LRJS). The company must pay you the wages for those fifteen days or the difference up to the correct amount, but the dismissal survives. That is why the fight over the figure is not fought in cents, but over whether the error was excusable.

The Tribunal Supremo does not measure the error as a percentage: it asks whether it could have been avoided with ordinary diligence. Failing to prorate the extra payments, leaving out a fixed bonus you receive every month, applying a salary below your collective agreement or ignoring the seniority your own payslip recognises are usually treated as inexcusable. An error arising from a reasonably arguable legal question, such as how to count an earlier period under another type of contract, may on the other hand be excusable.

First the correct figure has to be worked out, and that is where what gets overlooked comes to light. The reference salary is the one you were entitled to receive, not necessarily the one on your payslip, including the proportional share of extra payments and regular supplements. If you chained temporary contracts without significant breaks, or moved through another company in the group, your seniority may be longer than the letter says. Properly documented, each of those points can turn a minor error into an inexcusable one.

The thresholds: when your individual dismissal should have been collective

A 52.c) dismissal is only possible below the collective thresholds. Article 51.1 ET sets them over ninety days: ten workers in companies with fewer than one hundred, ten per cent in those with one hundred to three hundred, and thirty in those with more than three hundred, plus a total closure affecting more than five. Exceeding them requires a consultation period with the workers' representatives and handing over the economic documentation. Getting round that with individual dismissals is no minor irregularity.

What almost nobody explains is how they are counted. Article 51.1 adds the other terminations in the period at the employer's initiative for reasons not inherent to the worker as a person, except the end of temporary contracts, if there are at least five. The Tribunal Supremo has gone as far as including disciplinary dismissals the company admitted were unfair, and counting the ninety days both before and after your dismissal. And the Court of Justice of the European Union requires the workplace to be taken as the reference where that brings the numbers over the thresholds.

The consequence is voidness. The last paragraph of article 51.1 declares void any 52.c) terminations spread over successive ninety-day periods to evade the thresholds without new causes, and article 122.2 LRJS reflects this. Where the thresholds are exceeded within a single period without consultation, the courts also void the individual dismissal. Voidness means reinstatement with the wages you lost, and it changes the negotiation. That is why at the first meeting we ask you for a list: who has left the company, how and when.

Void even if the crisis is real: whom article 53.4 protects

Article 53.4 ET declares void any termination that is discriminatory or breaches fundamental rights, and requires the judge to declare it of their own motion. In addition, voidness applies without proving that motive in a list of situations: pregnancy, suspensions for birth, adoption, guardianship or foster care, parental leave, certain leave under article 37 requested or being taken (including reduced hours to care for children or relatives), the working-time adjustment in 34.8, the leave of absence in 46.3, gender or sexual violence, and the return to work after those suspensions, as long as twelve months have not passed since the birth or adoption.

This is the difference almost nobody explains: in an objective dismissal, the law is not satisfied with the crisis merely existing. For the dismissal of one of those people to be declared fair, the company must sufficiently prove that the objective cause specifically requires ending that person's contract. Proving losses is not enough: it has to explain why, out of the whole workforce, it was your post that had to go. Very few companies have that ready when they draft the letter.

Two more fronts. Legal workers' representatives have priority to remain in 52.c) dismissals, under article 52 itself. And Law 15/2022 on equal treatment includes illness or health condition among the grounds of discrimination: if the crisis appears right after a period of sick leave and nobody else leaves, it may be a facade. If you made a claim against the company before the dismissal, the route is voidness for breach of the guarantee against retaliation, which we explain in its own guide.

The clock starts at termination, not with the letter, and being paid closes nothing

Article 121.1 LRJS gives twenty days to challenge, counted from the day after the termination date, and allows you to sue earlier, from the notice letter. If you received it on the 1st taking effect fifteen days later, time does not start on the 2nd but on the day after the effective date. They are working days and a lapse period (art. 59.3 ET and art. 103.1 LRJS). Even so, we count from delivery: if the company paid in lieu of notice instead of giving it, the termination was immediate.

Conciliation before the regional mediation, arbitration and conciliation service is a precondition of the claim (art. 63 LRJS). Under article 65.1 LRJS, the request suspends the lapse period rather than restarting it: the count resumes the day after the meeting, or after fifteen working days if it has not been held, and the days already used do not come back. Article 5 of LO 1/2025, which requires an appropriate dispute resolution method to be tried first, applies in civil and commercial matters; in employment cases, the filter is this conciliation.

Being paid closes nothing: receiving the compensation or using the six hours a week of leave to look for work does not imply agreement (art. 121.2 LRJS and art. 53.2 ET). If you win unfairness, the company chooses within five days between reinstating you with the wages you lost or paying 33 days per year up to 24 months' pay (art. 56 ET), and the judge offsets what you already received (art. 123.4 LRJS). With nine years and 70 euros a day, you go from 12,600 to 20,790 euros. Seniority before 12 February 2012 is calculated at 45 days per year.

How we run the case, step by step

1. 1

   Fixing the termination date and the last day

   We read the effective date in the letter, check whether notice was given or paid in lieu, and count the twenty working days from the day after termination. We give you the deadline in writing, counted from the most cautious date.

2. 2

   Securing the letter, the payment and the copy to the representatives

   You sign the acknowledgement with the date and the words “not in agreement”, keep a copy and download your bank statement for the day of delivery. If there are workers' representatives, we ask them whether they received a copy of the notice.

3. 3

   Auditing the cause, the figure and the thresholds

   We compare the letter with the accounts filed at the Registro Mercantil (the Companies Register), recalculate the compensation using your correct salary and real seniority, and reconstruct with you the departures from the company in the ninety days before and after your dismissal.

4. 4

   Conciliation with the figure already worked out

   We file the request with the regional service, which suspends the lapse period, and attend with a settled proposal. If the company fails to appear without good cause and the judgment essentially matches the request, the court may fine it and order it to pay your legal fees up to 600 euros (art. 97.3 LRJS).

5. 5

   A claim in order: voidness, form and cause

   We sue before the social section of the Tribunal de Instancia, raising voidness first where there are grounds, then the formal defects and finally the lack of cause. We ask the company to produce its accounts, quarterly returns, bank statements and staff joining and leaving records, and commission an economic expert report if the figures call for it.

6. 6

   Hearing, election and appeal

   At the hearing the company proves its cause first. With a finding of unfairness we monitor the five days for the employer's election and the payment; if the judgment goes against you, we assess an appeal (recurso de suplicación) to the Social Chamber of the Tribunal Superior de Justicia (the regional high court), which must be announced within five days.

The law that applies

• Art. 51.1 ET. It sets the collective dismissal thresholds over ninety days and defines the economic cause: current or forecast losses or a persistent fall in ordinary income or sales, which exists with three consecutive quarters below the same quarters of the previous year. It declares void 52.c) terminations chained to evade the thresholds. BOE-A-2015-11430
• Art. 52 ET. It allows the contract to be terminated where a cause in article 51.1 exists and the termination affects fewer workers than its thresholds, with priority to remain for workers' representatives. BOE-A-2015-11430
• Art. 53 ET. It requires a letter stating the cause, compensation of twenty days per year capped at twelve months' pay made available at the same time, save for lack of liquidity stated in the letter, and fifteen days' notice copied to the representatives. It governs voidness, including for protected persons, and excuses omitted notice and excusable error. BOE-A-2015-11430
• Art. 56 ET. Once the dismissal is declared unfair, the employer elects within five days between reinstatement with the lost wages or payment of thirty-three days per year capped at twenty-four months' pay. If it does not elect, reinstatement is assumed. BOE-A-2015-11430
• Art. 65 LRJS. The conciliation or mediation request suspends the lapse period from filing; the count resumes the day after conciliation is attempted, or after fifteen working days if it has not been held. BOE-A-2011-15936
• Art. 121 LRJS. It gives twenty days to challenge, counted from the day after termination, and allows the action to be brought early from the notice. Receiving the compensation or using the job-search leave does not imply agreement. BOE-A-2011-15936
• Art. 122 LRJS. Fair only if the employer, having met the formalities, proves the cause in the letter; void in the cases in article 53.4 ET and where it evades the collective thresholds; unfair if it breaches article 53.1 ET, except for missing notice or excusable error. BOE-A-2011-15936
• Art. 123 LRJS. If fair, it orders payment of any shortfall in compensation and notice; if unfair or void, the effects of disciplinary dismissal apply. On reinstatement, the worker repays the compensation once the judgment is final, and the judge offsets what was received against the award. BOE-A-2011-15936

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

Frequently asked questions